Sydney Retail - Two Cool Precincts in the Eastern Suburbs

Luke Dennehy // Investing // 5th Jul 2018

There has been so much noise the last few years about the death of the traditional shopping strip, as competition increased because of online shopping and the expansion of many suburban shopping centres around Australia.

That familiar 'for lease' sign in some previous iconic strips such as Bridge Road in Richmond in Victoria, and the Darlinghurst end of Oxford Street in Sydney, has become all too depressingly common.

But all is not lost! Some shopping strips are doing better than ever, with retail tenants being able to capitalise on or expand into new niche markets. There is also a real boost to retail trade from significant commercial and residential developments.

Recently Commercial Property Guide took a look at the hopefully changing fortunes of Melbourne's Chapel Street in South Yarra. New developments are set to bring that part of the street back to its original glory.

In this article we look at two iconic Sydney strips, both very different in style - Gould Street in Bondi, and Oxford Street Paddington, to see where they are at.

Gould Street Bondi

Gould Street is a real success story in Bondi. So much so that Victor Negrine, the Director of Commercial Sales and Leasing at Richardson & Wrench in Bondi Junction, said the street is booked up - full of tenants.

"I am finding quite high demand out there for tenants in the marketplace at the moment for Gould Street" he said.

"It's that old scenario, limited supply and high demand."

The figures thrown out to Commercial Property Guide for retail rents in the popular strip, can reach as high as $2600 a square metre - that’s on the higher end of the average

The street has cemented itself as one of the very on-trend fashion hot spots in Sydney, with stores such as Playa by Lucy Folk, Jac and Jack, Bondi Wash Tuchuzy and the Earth Food Store, which has been open since 1992, all doing very well.

Mr Negrine believes two new redevelopments, one on the corner on Gould and Hall, and the other on Gould and Curlewis Street have served the precinct well.

"These new developments have certainly helped it big time. 25 years ago or less the street was very different," Mr Negrine said. "It was a bit grungy, not as stylish as it is now. It's got such a great reputation, but back then it didn't have the type of allure it has today."

It seems visiting Bondi isn’t all about the famous beach, the suburb has a lot of substance to it and Gould Street could be the underrated jewel in its crown.

Oxford Street Paddington

While the City end of Oxford Street is struggling, things are looking good for Paddington.

Mr Negrine says there is a lot of interest, in particular in a new niche for the area - homewares and furniture.

"I’ve signed up a lot of leases the past six months, and lot of them have been furniture retailers, including the new James Said store," Negrine noted.

"While there is still a strong demand from fashion, you are seeing more and more furniture and homewares stores in that area. Furniture stores account for about 10 per cent of all shops in the area now, which is a marked changed.”

Former chief financial adviser to Kerry Packer’s Consolidated Press Holdings, Theo Onisforou, could be called the king of Oxford Street, Paddington. He owns 17 properties on Oxford Street Paddington, and like Negrine, he believes the future is furniture and homewares, and hospitality. He recently told Sydney's Daily Telegraph that the area is "absolutely thriving," and like Gould Street in Bondi, he has had to knock back International brands.

On the other hand, while Paddington is thriving, the same can't be said about Darlinghurst. The Sydney City Council recently put three run down blocks up for sale in Darlinghurst, but Mr Onisforou has no plans to try and rescue the area.

"I am a Paddington guy, not a Darlinghurst guy," he recently told The Wentworth Courier. "There are clear differences between Oxford Street in Paddington, and Oxford Street in Darlinghurst. I don't particularly like the Darlinghurst end. The reality is that Oxford Street, Paddington, has developed an additional string to its bow. Previously it used to be about fashion but now it's a great specialty food and furniture location.”

"As someone who is Paddington born and bred, I'd like to see the street fully recovered."

That improved content includes a number of properties such as The Paddington, Fred's and The Chicken Shop by Justin Hemmes’ Merivale Group It seems anything Hemmes does, the Sydney crowds follow.

While things are going better for that end of Oxford Street, Mr Negrine believes there is still room for improvement. "I think Paddington needs increased development to reach its full potential”.

Commercial real estate, especially retail locations cannot be judged by general one-size-fits-all city-wide rules. While many retail landlords might have glum faces, there are some special retail locations that remain cool (and hot at the same time) no matter what the economic climate.